UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission File Number: 001-36445

NanoVibronix, Inc

(Exact name of registrant as specified in its charter)

Delaware

01-0801232

(State or other jurisdiction

of incorporation or organization)

(I.R.S. Employer

Identification Number)

525 Executive Blvd. Elmsford, New York		10523
(Address of principal executive office)		(Zip Code)

Registrant’s telephone number, including area code: (914) 233-3004

(Former name, former address and

former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol		Name of each exchange on which registered
Common stock, par value $0.001 per share		NAOV		NASDAQ Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant has been required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☒	Smaller reporting company	☒

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

The number of shares outstanding of the registrant’s Common Stock as of May 15, 2023 was 1,662,330 shares.

NanoVibronix, Inc.

Quarter Ended March 31, 2023

TABLE OF CONTENTS

		Page
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)	1

	Condensed Consolidated Balance Sheets as of March 31, 2023 (Unaudited) and December 31, 2022	1

	Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three Months Ended March 31, 2023 and 2022	2

	Unaudited Condensed Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 31, 2023 and 2022	3

	Unaudited Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2023 and 2022	4

	Notes to Unaudited Condensed Consolidated Financial Statements	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	18

Item 4.	Controls and Procedures	18

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	19

Item 1A.	Risk Factors	19

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	20

Item 3.	Defaults Upon Senior Securities	20

Item 4.	Mine Safety Disclosures	20

Item 5.	Other Information	20

Item 6.	Exhibits	20

Signatures		21

PART I - FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NanoVibronix, Inc.

Condensed Consolidated Balance Sheets

(Amounts in thousands except share and per share data)

	March 31, 2023			December 31, 2022
	(unaudited)
ASSETS:
Current assets:
Cash	$	1,512		$	2,713
Trade receivables, net		58			9
Prepaid expenses and other accounts receivable		782			712
Inventory, net		2,213			2,175
Total current assets		4,565			5,609

Noncurrent assets:
Fixed assets, net		7			7
Other assets		5			3
Severance pay fund		179			179
Operating lease right-of-use assets, net		55			81
Total non-current assets		246			270
Total assets	$	4,811		$	5,879

LIABILITIES AND STOCKHOLDERS’ EQUITY:

Current liabilities:
Trade payables	$	45		$	66
Other accounts payable and accrued expenses		2,189			2,148
Deferred revenue		-			21
Operating lease liabilities		55			81
Total current liabilities		2,289			2,316

Non-current liabilities:
Accrued severance pay		223			223
Deferred licensing income		96			107
Total liabilities		2,608			2,646

Commitments and contingencies		-			-

Stockholders’ equity:
Series C Preferred stock of $0.001 par value - Authorized: 3,000,000 shares at both March 31, 2023 and December 31, 2022; Issued and outstanding: 0 shares at both March 31, 2023 and December 31, 2022		-			-

Series D Preferred stock of $0.001 par value - Authorized: 506 shares at both March 31, 2023 and December 31, 2022; Issued and outstanding: 0 shares at both March 31, 2023 and December 31, 2022		-			-

Series E Preferred stock of $0.001 par value - Authorized: 1,999,494 shares at both March 31, 2023 and December 31, 2022; Issued and outstanding: 0 shares at both March 31, 2023 and December 31, 2022		-			-

Series F Preferred stock of $0.01 par value - Authorized: 40,000 and 0 shares at both March 31, 2023 and December 31, 2022; Issued and outstanding: 0 shares at both March 31, 2023 and December 31, 2022		-			-
Preferred stock value		-			-

Common stock of $0.001 par value - Authorized: 40,000,000 shares at both March 31, 2023 and December 31, 2022, respectively; Issued and outstanding: 1,662,330 and 1,641,146 shares at March 31, 2023 and December 31, 2022, respectively		2			2

Additional paid in capital		65,708			65,634
Accumulated other comprehensive income		(25	)		(18	)
Accumulated deficit		(63,482	)		(62,385	)
Total stockholders’ equity		2,203			3,233
Total liabilities and stockholders’ equity	$	4,811		$	5,879

The accompanying notes are an integral part of these condensed consolidated financial statements

NanoVibronix, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)

(Amounts in thousands except share and per share data)

	2023			2022
	Three Months Ended March 31,
	2023			2022

Revenues	$	354		$	272
Cost of revenues		119			166
Gross profit		235			106

Operating expenses:
Research and development		55			66
Selling and marketing		214			210
General and administrative		1,021			942

Total operating expenses		1,290			1,218

Loss from operations		(1,055	)		(1,112	)

Interest expense		(34	)		-
Financial income (expense), net		(6	)		(13	)

Loss before taxes on income		(1,095	)		(1,125	)

Income tax expense		(2	)		(7	)

Net loss	$	(1,097	)	$	(1,132	)

Basic and diluted net loss available for holders of common stock, Series C Preferred Stock and Series D Preferred Stock	$	(0.67	)	$	(0.81	)

Weighted average common shares outstanding:
Basic and diluted		1,651,936			1,399,890

Comprehensive loss:
Net loss available to common stockholders		(1,097	)		(1,132	)
Change in foreign currency translation adjustments		(5	)		(4	)
Comprehensive loss		(1,102	)		(1,136	)

The accompanying notes are an integral part of these condensed consolidated financial statements

NanoVibronix, Inc.

Condensed Consolidated Statement of Stockholders’ Equity (Unaudited)

(Amounts in thousands except share and per share data)

	Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Capital		Income			Deficit			Equity
	Series C Preferred Stock				Series D Preferred Stock				Series E Preferred Stock				Series F Preferred Stock				Common Stock				Additional Paid - in		Accumulated Other Comprehensive			Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Capital		Income			Deficit			Equity
Balance, December 31, 2021		-	$	-		-	$	-		-	$	-		-	$	-		1,399,890	$	1	$	63,189	$	60		$	(56,937	)	$	6,314
Stock-based compensation		-		-		-		-		-		-		-		-		-		-		86		-			-			86
Currency translation adjustment		-		-		-		-		-		-		-		-		-		-		-		(6	)		-			(6	)
Net loss		-		-		-		-		-		-		-		-		-		-		-		-			(1,132	)		(1,132	)
Balance, March 31, 2022		-	$	-		-	$	-		-	$	-		-	$	-		1,399,890	$	1	$	63,275	$	54		$	(58,069	)	$	5,262

Balance, December 31, 2022		-	$	-		-	$	-		-	$	-		-	$	-		1,641,146	$	2	$	65,634	$	(18	)	$	(62,385	)	$	3,233
Beginning balance ,value		-	$	-		-	$	-		-	$	-		-	$	-		1,641,146	$	2	$	65,634	$	(18	)	$	(62,385	)	$	3,233
Stock-based compensation		-		-		-		-		-		-		-		-		-		-		67		-			-			67
Exercise of options		-		-		-		-		-		-		-		-		5,459		-		7		-			-			7
Rounding-up of fractional shares due to reverse stock split		-		-		-		-		-		-		-		-		15,726		-		-		-			-			-
Other comprehensive loss		-		-		-		-		-		-		-		-		-		-		-		(7	)		-			(7	)
Net loss		-		-		-		-		-		-		-		-		-		-		-		-			(1,097	)		(1,097	)
Balance, March 31, 2023		-	$	-		-	$	-		-	$	-		-	$	-		1,662,330	$	2	$	65,708	$	(25	)	$	(63,482	)	$	2,203
Ending balance, value		-	$	-		-	$	-		-	$	-		-	$	-		1,662,330	$	2	$	65,708	$	(25	)	$	(63,482	)	$	2,203

The accompanying notes are an integral part of these condensed consolidated financial statements

NanoVibronix, Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)

(Amounts in thousands except share and per share data)

	2023			2022
	Three Months Ended March 31,
	2023			2022
Cash flows from operating activities:
Net loss	$	(1,097	)	$	(1,132	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		1			-
Stock-based compensation		67			86
Change in fair value of equity investment		(2	)		2
Changes in operating assets and liabilities:
Trade receivable		(49	)		66
Other accounts receivable and prepaid expenses		(70	)		(681	)
Inventory		(38	)		(180	)
Trade payables		(21	)		85
Other accounts payable and accrued expenses		41			24
Deferred revenue		(32	)		(11	)
Net cash used in operating activities		(1,200	)		(1,741	)

Cash flows from investing activities:
Purchases of property plant and equipment		(1	)		-
Net cash used in investing activities		(1	)		-

Cash flows from financing activities:
Proceeds from exercise of options		7			-
Net cash provided by financing activities		7			-

Effects of currency translation on cash and cash equivalents		(7	)		(6	)

Net (decrease) in cash		(1,201	)		(1,747	)
Cash at beginning of period		2,713			7,737

Cash at end of period	$	1,512		$	5,990

The accompanying notes are an integral part of these condensed consolidated financial statements

NanoVibronix, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(Amounts in thousands except share and per share data)

NOTE 1 – DESCRIPTION OF BUSINESS

NanoVibronix, Inc. (the “Company”), a Delaware corporation, commenced operations on October 20, 2003 and is a medical device company focusing on noninvasive biological response-activating devices that target wound healing and pain therapy and can be administered at home, without the assistance of medical professionals.

The Company’s principal research and development activities are conducted in Israel through its wholly owned subsidiary, NanoVibronix (Israel 2003) Ltd., a company registered in Israel, which commenced operations in October 2003.

NOTE 2 – GOING CONCERN AND LIQUIDITY

The Company’s ability to continue to operate is dependent mainly on its ability to successfully market and sell its products and the receipt of additional financing until profitability is achieved. During the first quarter of 2023, the Company has incurred losses as well as negative cash outflows from operating activities and expects to incur losses and negative cash outflows from operating activities through fiscal year 2023. Because the Company does not have sufficient resources to fund its operations for the next twelve months from the date of this filing, substantial doubt exists as to the Company’s ability to continue as a going concern.

The Company will need to raise additional capital to finance its losses and negative cash flows from operations and may continue to be dependent on additional capital raising as long as our products do not reach commercial profitability. If the Company is unable to obtain additional financing when it becomes necessary, the development of its product candidates could be impacted and there could be a material adverse effect on the Company’s business and financial condition. These financial statements do not include any adjustments that may result from the outcome of this uncertainty.

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation and principles of consolidation

The Company’s condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for the interim financial information and with instructions to Form 10-Q and Article 10 of Regulation S-X. The unaudited consolidated financial statements include the accounts of all subsidiaries in which the Company holds a controlling financial interest as of the financial statement date.

The unaudited consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Unaudited interim financial information

In the opinion of management, the accompanying unaudited interim consolidated financial statements reflect all adjustments, which include only normal recurring adjustments, necessary to state fairly the financial position and results of operations of the Company. These condensed consolidated financial statements and notes thereto are unaudited and should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2022, as found in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on April 17, 2023.

The balance sheet for December 31, 2022 was derived from the Company’s audited financial statements for the year ended December 31, 2022. The results of operations for the periods presented are not necessarily indicative of results that could be expected for the entire fiscal year due to seasonality and other factors. Certain information and footnote disclosures normally included in the consolidated financial statements in accordance with U.S. GAAP have been omitted in accordance with the rules and regulations of the SEC for interim reporting.

Use of estimates

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions. The Company believes that the estimates, judgments and assumptions used are reasonable based upon information available at the time they are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Foreign currency translation

Non-U.S. dollar denominated transactions and balances have been re-measured to U.S. dollars. All gains and losses from re-measurement of monetary balance sheet items denominated in non-U.S. dollar currencies are reflected in the statements of operations as other comprehensive income, as appropriate. The cumulative translation gains as of the years ended March 31, 2023 and 2022 were $7 and $6, respectively.

Revenue recognition

It is the Company’s policy that revenues from product sales is recognized in accordance with ASC 606 “Revenue Recognition.” Five basic steps must be followed before revenue can be recognized; (1) Identifying the contract(s) with a customer that creates enforceable rights and obligations; (2) Identifying the performance obligations in the contract, such as promising to transfer goods or services to a customer; (3) Determining the transaction price, meaning the amount of consideration in a contract to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer; (4) Allocating the transaction price to the performance obligations in the contract, which requires the company to allocate the transaction price to each performance obligation on the basis of the relative standalone selling prices of each distinct good or services promised in the contract; and (5) Recognizing revenue when (or as) the entity satisfies a performance obligation by transferring a promised good or service to a customer. The amount of revenue recognized is the amount allocated to the satisfied performance obligation.

Revenue from product sales is recorded at the net sales price, or “transaction price,” which includes estimates of variable consideration that result from coupons, discounts and distributor fees, processing fees, as well as allowances for returns and government rebates. The Company constrains revenue by considering factors that could otherwise lead to a probable reversal of revenue. Collectability of revenue is reasonably assured based on historical evidence of collectability between the Company and its customers.

Revenues from sales to distributors are recognized at the time the products are delivered to the distributors (“sell-in”). The Company does not grant rights of return, credits, rebates, price protection, or other privileges on its products to distributors.

Recently adopted accounting standards

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”) and also issued subsequent amendments to the initial guidance: ASU 2018-19, ASU 2019-04, and ASU 2019-05 (collectively, “Topic 326”). Topic 326 requires measurement and recognition of expected credit losses for financial assets held. This ASU is effective for interim and annual reporting periods beginning after December 15, 2022, including interim periods within those fiscal years. The Company adopted ASU 2016-13 as of January 1, 2023, there was no material impact on its condensed consolidated financial statements.

NOTE 4 – STOCKHOLDERS’ EQUITY

Common stock

The common stock confers upon the holders the right to receive notice to participate and vote in general meetings of the Company, and the right to receive dividends, if declared, and to participate in the distribution of the surplus assets and funds of the Company in the event of liquidation, dissolution or winding up of the Company.

Reverse Stock Split

On February 8, 2023, the Company effected a reverse stock split of its common stock at a ratio of 1 post-split share for every 20 pre-split shares. The Company’s common stock begin trading on a split-adjusted basis when the market opened on February 9, 2023 (the “Reverse Stock Split”).

At an annual meeting of stockholders held on December 15, 2022, the Company’s stockholders granted the Company’s Board of Directors (the “Board”), the discretion to effect a reverse stock split of the Company’s common stock through an amendment to its Amended and Restated Certificate of Incorporation at a ratio of not less than 1-for-2 and not more than 1-for-50, with such ratio to be determined by the Board.

At the effective time of the Reverse Stock Split, every 20 shares of the Company’s issued and outstanding common stock were converted automatically into one issued and outstanding share of common stock without any change in the par value per share. Stockholders holding shares through a brokerage account had their shares automatically adjusted to reflect the 1-for-20 Reverse Stock Split. The Reverse Stock Split affected all stockholders uniformly and did not alter any stockholder’s percentage interest in the Company’s equity, except to the extent that the Reverse Stock Split resulted in a stockholder owning a fractional share. Any fractional share of a stockholder resulting from the Reverse Stock Split was rounded up to the nearest whole number of shares. Proportional adjustments were made to the number of shares of the Company’s common stock issuable upon exercise or conversion of the Company’s equity awards, warrants and other convertible securities, as well as the applicable exercise or conversion price thereof. On February 16, 2023, the Company rounded up fractional shares to its nearest whole number of 15,726 shares.

All references in this Report to number of shares, price per share and weighted average number of shares of common stock outstanding prior to the Reverse Stock Split have been adjusted to reflect the Reverse Stock Split on a retroactive basis, unless otherwise noted.

Stock-based compensation and Options

During the three-month period ended March 31, 2023 and 2022, 5,459 and 0 employee options were exercised, and 0 and 6,000 options were granted, respectively. The options were granted to employees and board members and were recorded at a fair value and vested over three years. During the three-month periods ended March 31, 2023 and 2022, stock-based compensation expense of $67 and $86 was recorded for options that vested, respectively.

SCHEDULE OF OPTIONS ACTIVITY

	Shares Under Options		Weighted Average Exercise Price per Share		Weighted Average Remaining Life (Years)
Outstanding – December 31, 2021		127,000	$	31.86		7.77
Granted		6,000		15.56		9.89
Exercised		-		-		-
Outstanding – March 31, 2022		133,000	$	26.00		7.63

Outstanding – December 31, 2022		147,619	$	24.42		7.24

SEC Form 10-Q filed by NanoVibronix Inc.